Can NRIs Invest In PMS?

The NRI Portfolio Challenge

Non-Resident Indians (NRIs) today face a practical portfolio challenge: how to participate in India’s long-term growth without managing scattered mutual funds, direct equities, and regulatory compliance from abroad.

For investors allocating meaningful capital to Indian markets, managing individual stocks remotely can become operationally complex. Tracking portfolios across time zones, maintaining regulatory documentation, and handling taxation often adds friction to long-term investing.

The Portfolio Management Services (PMS) offer one possible solution by allowing professional portfolio managers to manage equity investments on behalf of clients.

Why should NRIs consider investing through PMS in India? Three structural factors often shape the discussion: 

• Concentrated portfolio construction
• Regulatory oversight under SEBI Portfolio Managers Regulations
• Customisation for larger investment portfolios

Under SEBI Portfolio Managers Regulations (Regulation 23(2)), the minimum investment for PMS is ₹50 lakh per client, unless the investor qualifies as an accredited investor—i.e., an individual, HUF, family trust, or body corporate that meets SEBI-prescribed financial thresholds (such as a minimum net worth or income level) and is formally certified as having the financial sophistication and capacity to take on higher investment risk.

For NRIs allocating ₹50 lakh or more to Indian equities, PMS may offer a structured alternative to fragmented retail investment approaches.

What Are Portfolio Management Services (PMS)?

Portfolio Management Services are SEBI-regulated investment mandates where a professional portfolio manager manages securities on behalf of a client.

Unlike mutual funds, where investor money is pooled together, PMS operates through separately managed portfolios.

This means every investor has their own demat account holding individual securities rather than units in a pooled fund.

Key structural features include

• Direct ownership of securities in the investor’s demat account
• Strategy-specific portfolios managed by a professional manager
• Transparent fee structures
• Periodic performance reporting

SEBI regulations require portfolio managers to maintain a minimum net worth of ₹5 crore and disclose audited performance through a formal disclosure document.

A SEBI circular issued in September 2025 standardized PMS disclosure documents, requiring both static and dynamic disclosures with updates within seven days of material changes.

As of early 2026, India has over 500 SEBI registered portfolio managers, reflecting the rapid growth of the PMS industry.

PMS Key Facts

Importantly, taxation occurs at the investor level, since the securities are directly owned.

NRI Eligibility: Who Can Invest?

NRIs are permitted to invest in PMS in India subject to FEMA regulations and banking requirements.

Investment typically takes place through NRE or NRO bank accounts, depending on repatriation needs.

Repatriation Snapshot

These limits are governed by RBI foreign exchange regulations.

Certain jurisdictions may face additional compliance restrictions.

PMS providers do not onboard US/Canada-based clients due to SEC/securities law compliance requirements, and those that do impose significantly stricter documentation. US/Canada-based NRIs should verify eligibility directly with the provider before starting the onboarding process

Many NRIs also manage Indian investments through a Power of Attorney (PoA) holder, often a family member in India. A PoA holder can help complete documentation and operational formalities, though portfolio management decisions remain with the portfolio manager.

Setup and Documentation

Opening a PMS account as an NRI typically involves several regulatory steps.

Documents generally required 

• Passport and overseas address proof
• PAN card
• NRE or NRO bank account
• FATCA declaration (for certain jurisdictions)
• KYC documentation and client agreement

Banks and PMS providers coordinate to ensure compliance with FEMA, SEBI, and KYC regulations.

Once documentation is completed, the investor signs the PMS agreement and allocates the investment capital.

How PMS Works in Practice

Equity PMS strategies generally maintain concentrated portfolios of 15–25 stocks, depending on the investment mandate.

This differs from diversified mutual funds that often hold 50–100 securities.

Potential advantages

• Higher allocation to high-conviction investment ideas
• Ability to build differentiated sector exposure

Risks

• Greater volatility relative to diversified funds
• Stock-specific drawdowns impacting returns

PMS Fees in Practice

PMS fees typically follow two structures:

Under performance-fee arrangements, the portfolio manager earns a share of profits only if returns exceed a predefined benchmark or hurdle rate.

Exact fee structures vary across managers and are detailed in the PMS disclosure document.

Monitoring Your Portfolio From Abroad

For NRIs, portfolio monitoring is largely digital.

Most PMS providers offer: 

• Online portfolio dashboards
• Monthly or quarterly performance reports
• Trade confirmations and capital gains statements
• Periodic review calls with relationship managers

This allows investors to track their portfolio remotely without executing individual trades.

Tax and Repatriation Rules

Since PMS investments involve direct ownership of securities, taxation is applied at the investor level.

Following the Budget 2024 changes effective July 23, 2024, equity capital gains are taxed as:

For NRIs, Tax Deducted at Source (TDS) applies under Section 195 of the Income Tax Act.

Where a Double Taxation Avoidance Agreement (DTAA) exists between India and the investor’s country of residence, the tax paid in India can typically be claimed as a credit when filing taxes in the resident country.

Tax treatment varies by jurisdiction, so professional tax advice is recommended.

Currency Consideration

For many NRIs, investing in Indian equities also involves a currency diversification decision.

Returns ultimately depend on: 

• Performance of Indian companies
• Movement of the Indian rupee relative to the investor’s base currency

Long-term investors often view this as a way to diversify portfolios that may otherwise be heavily exposed to developed market currencies.

PMS vs Mutual Funds for NRIs

India’s investment industry has expanded significantly.

Suitability depends on capital allocation, risk tolerance, and portfolio objectives.

How to Choose a PMS Manager

With more than 500 registered portfolio managers, selecting the right PMS strategy requires careful evaluation.

Investors often review several criteria.

Track record

A performance history of at least 5–7 years helps assess performance across different market cycles.

Investment philosophy

The manager should clearly explain: 

• Stock selection framework
• Sector allocation approach
• Portfolio concentration strategy

Disclosure document quality

SEBI-mandated disclosure documents should transparently describe: 

• Historical performance
• Fee structure
• Key risks

Portfolio turnover

High portfolio churn may indicate trading strategies rather than long-term investing.

When PMS May Not Be Suitable

PMS may not be appropriate for every investor.

Situations where it may not be suitable include: 

• Investment capital below ₹50 lakh
• Preference for passive index investing
• Need for frequent liquidity
• Low tolerance for equity market volatility

Concentrated portfolios may experience 20–30% drawdowns during market corrections, similar to broader equity markets.

Allocation decisions should therefore align with overall portfolio strategy.

Practical Checklist for NRIs Considering PMS

Before investing in PMS, consider the following questions: 

• Is at least ₹50 lakh allocated specifically for Indian equities?
• Does this investment fit within a globally diversified portfolio?
• Are you comfortable with equity volatility?
• Do you understand the PMS fee structure?
• Are you investing through an NRE or NRO account?
• Have you evaluated the updated capital gains tax rules?

Investors should consult financial and tax advisors before making allocation decisions.

Frequently Asked Questions

Can NRIs invest in PMS in India?

Yes. NRIs can invest in SEBI-registered Portfolio Management Services through NRE or NRO accounts subject to FEMA compliance and documentation requirements.

What is the minimum investment for PMS?

SEBI regulations mandate a minimum investment of ₹50 lakh per client for PMS.

What tax do NRIs pay on PMS gains?

Capital gains on equities are currently taxed as: 

• 20% for short-term gains
• 12.5% for long-term gains above ₹1.25 lakh

TDS provisions apply for NRI investors.

How can NRIs repatriate PMS investment proceeds?

Repatriation depends on the bank account used.

• Investments through NRE accounts are fully repatriable
• NRO accounts allow repatriation up to $1 million annually

PMS vs mutual funds — which is better for NRIs?

Neither structure is inherently superior. PMS may suit investors allocating larger capital with higher risk tolerance, while mutual funds offer accessible and diversified exposure.

Risk Disclaimer

Investments in securities are subject to market risks. Past performance is not indicative of future returns. Please read all related documents carefully before investing. This content is for informational purposes only and does not constitute investment advice. Dezerv is registered with SEBI as a Portfolio Manager.